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You invested in a Load-up fund which charges a management fee of 1.8% per annum and a front-end load of 2%. The fund invested in
You invested in a Load-up fund which charges a management fee of 1.8% per annum and a front-end load of 2%. The fund invested in a portfolio currently is worth $80 million and has a liability of $30 million. It has 40 million outstanding shares. The investment rate of return of the fund (before any fees) is 8% in year 1 and 12% in year 2. You intend to re-invest all investment returns in future years and will not sell any shares of the fund in the coming 2 years. a) Calculate the NAV per share of the fund in the beginning. (2 marks) b) What is your investment return % at the end of Year 1 ? (3 marks) c) If you invest $10,000 in this fund, how much is it worth (after fees) at the end of Year 2? (3 marks) d) If you invest $48,000 and purchase 40,000 shares of this fund in the beginning, what is the premium (or discount) as a % of the NAV? (2 marks)
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